Tobacco Tax Provisions of the Build… | Campaign for Tobacco-Free Kids
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Tobacco Tax Provisions of the Build Back Better Act Will Protect Kids, Save Lives and Raise Revenue

Statement of Matthew L. Myers, President, Campaign for Tobacco-Free Kids
September 14, 2021

WASHINGTON, D.C.  – The Campaign for Tobacco-Free Kids strongly supports the tobacco tax provisions included in the Build Back Better Act legislation proposed by the U.S. House Ways and Means Committee. Increasing federal tobacco taxes will greatly improve public health and save lives by preventing kids from starting to use tobacco products and encouraging current tobacco users to quit. At the same time, it will raise revenue to help fund important initiatives in the bill, including by closing existing tax loopholes that have created incentives for tax avoidance. 

The evidence is clear that increasing tobacco taxes is one of the most effective ways to reduce tobacco use, which is the leading cause of preventable death in the United States and kills over 480,000 Americans every year. Decades of economic studies and Surgeon General reports show that significant tobacco tax increases motivate current tobacco users to quit and are particularly effective at preventing kids, who are more price-sensitive, from starting to use tobacco products. Public health groups estimate that doubling the federal cigarette tax – as the legislation proposes – will reduce the number of adult smokers by 1.1 million in the first year, prevent 507,000 kids alive today from becoming smokers and save over 418,000 lives over time.

Increasing tobacco taxes will also help reduce health disparities. Because people with lower incomes suffer disproportionately from the disease and death caused by smoking and are more likely to quit smoking in response to a significant price increase, they would receive the greatest health benefits from a tobacco tax increase. The CDC and other health experts recognize that these individuals will be more likely to quit due to a tobacco tax increase. In fact, nearly half the lives saved due to reductions in smoking from the last federal tobacco tax increase (enacted in 2009) are estimated to be among people living below the poverty line. 

The proposed legislation would increase federal tobacco taxes for the first time in over a decade, taking an overdue step to drive down tobacco use and respond to a significantly changed landscape of tobacco products. It would double the current federal cigarette tax to $2.01 per pack, increase taxes on other tobacco products to an equivalent level, and establish a first-ever federal tax on e-cigarettes.

A federal tax on e-cigarettes is a necessary response to high rates of youth use. E-cigarettes, which are currently not taxed at the federal level, have become by far the most popular tobacco product among youth, rising to what the Surgeon General and the FDA have called epidemic levels. In 2020, 3.6 million middle and high school students used e-cigarettes, including 1 in 5 high school students. A federal tax on e-cigarettes is a key element of the overall effort to reduce youth e-cigarette use.

In addition, equalizing tobacco tax rates would eliminate loopholes that create incentives for tax avoidance. Current disparities in tax rates have created opportunities for tobacco manufacturers to change how they make or label their products, such as cigars, so that they qualify for lower tax rates, making these products more affordable and appealing to kids and costing the government revenue.

A tobacco tax increase is a win-win-win solution – a health win that reduces tobacco use and saves lives, a financial win that reliably raises revenue and a political win that polls consistently show is popular with voters. We urge members of Congress to support these critical provisions to reduce tobacco’s terrible toll on our nation’s health.